Who are the real job creators?

As I write this, the stock market is hovering around record highs. The Federal Reserve is keeping interest rates low to stimulate borrowing and investment. Corporate profits are generally high and many companies are sitting on record amounts of cash. This should be the sign of a booming economy that is creating lots of jobs. In reality, the economy is stagnant and unemployment is stubbornly high. So what is the problem?

The problem is demand. The people who would buy the products that these companies make don’t have the money to purchase them. It’s fairly simple. There are two parts of a consumer economy: producers and consumers. If there’s no demand for the products, companies are not going to invest in more capacity and jobs. In this economy, it’s the consumers who are missing. While the wealthy certainly consume, there’s a limit to how much stuff they can buy that will stimulate the core economy.

If I have a successful business, I’m only going in invest in new production capacity if there is a demand for my product. If the majority of consumers don’t have money for other than essentials, then I’m not going to invest and create new jobs. Whether a small local business or a large corporation, if there’s no prospect of profit, there’s no investment and no new jobs. It’s that simple!

It is an article of faith among conservatives that the job creators are those with the wealth to invest in companies, thereby creating jobs for workers. This supply side approach to economics assumes that wealth will trickle down to the middle and lower economic classes. By this theory, the more money in the hands of the wealthy, the more will “trickle down” to the middle and lower economic classes.

Since the initiation of this strategy during the Reagan administration, there has been a dramatic redistribution of wealth in the country, moving more and more money into the accounts of the upper 5 percent and away from the 95 percent. Because of this transfer of wealth the 95 percent do not have enough money to keep the economy healthy through their purchases. That’s where we are now.

So who are the job creators? Like most complex problems, such as operating a national economy, it’s a team effort. There is no doubt that investment money is needed (that’s the wealthy and money rich companies), but the consumer is equally important in having a thriving economy. If you want to meet a real job creator, go look in the mirror.